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TMI Blog2014 (12) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... d losses ought to have been set off to the extent of the available business income - when the AO has made the addition of more than 38 lakhs then to that extent the carry forward business losses of the assessee should have been set off - setting off carry forward business losses now depends on the finality of the addition made by Assessing Officer u/s 14A - the allowability of setting off the carry forward business losses depends upon the total income as per the outcome of the appeal. Whether section 14A is attracted in respect of the investment made in shares albeit no exempt income is earned by the assessee on such investment - Held that:- The assessee has not received/earned any exempt income during the year - there is no claim of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 14A of ₹ 38,19,498/- which includes disallowance u/r 8D(2)(ii) of ₹ 33,09,986/- u/r 8D(2) (iii) of ₹ 5,09,512/-, without properly appreciating the fact that appellant did not have any income during the year which is being claimed exempt. 3. The ld. CIT(A) erred in confirming disallowance u/s 14A without appreciating the fact that investments held by the appellant are capable of earning taxable income being capital gain, other income which are liable to be taxed and hence the provisions of Section 14A are inapplicable. 4. The ld. Assessing Officer as well as ld. CIT(A) erred in enhancing book profit u/s 115JB by ₹ 38,20,586/- being disallowance made while computing income under normal provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business income. When the Assessing Officer has made the addition of more than 38 lakhs then to that extent the carry forward business losses of the assessee should have been set off. However the said setting off carry forward business losses now depends on the finality of the addition made by Assessing Officer u/s 14A as well as other additions which the assessee has challenged in ground no. 2 3. Thus in view of the facts and circumstances of the case the allowability of setting off the carry forward business losses depends upon the total income as per the outcome of the appeal. 3. Ground no. 2 and 3 is regarding disallowance u/s 14A. 4. During the year under consideration, the assessee made investment in purchase of shares. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable in the case of the assessee. In support of his contention he has relied upon the Judgment of Hon ble Delhi High Court in the case of CIT Vs. Holcim India. P. Ltd. (ITA NO. 485/2014 299/2014, and submitted that the Hon ble High Court after considering the various decisions such as the decision of Punjab Haryana High Court, decision of Gujarat High Court as well as decision of Hon ble Allhabad High Court on the point, held that when the assessee has not claimed any exempt income then no disallowance can be made by invoking the provisions of section 14A. The Ld. Authorized Representative has also relied upon the decision of Chennai Benches of this Tribunal in the case of CIT Vs. M. Baskaran dated 31st July 2014 in ITA no. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant-Revenue. No contrary decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad Vs. M/s. Lakhani Marketing Incl., ITA No. 970/2008, decided on 02.04.2014, made reference to two earlier decisions of the same Court in CIT Vs. Hero Cycles Limited, [2010] 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, ( [2009] 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subsequent assessment year. For example, long term capital would not be taxable, may depend upon the nature of transaction entered gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains tax. It is an undisputed position that respondent assessee is an investment company and had invested by purchasing a substantial number of shares and thereby securing right to management. Possibility of sale of shares by private placement etc. cannot be ruled out and is not an improbability. Dividend mayor may not be declared. Dividend is declared by the company and strictly in legal sense, a shareholder has not control and cannot insist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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